James West

Gold: The Only Remaining Bubble?

The armchair analyst who is the author of this piece clearly takes his cues from the media. Now everything that rises in price is a bubble? Thats the mentality that creates bubbles.

Gold is in both a long-term structural and secular bull phase, due precisely because inflation is rampant. Important here to distinguish between price inflation and monetary inflation. To deny the existence of monetary inflation in view of the planned printing of $2 trillion this year is to have one's head anchored deeply into the dunes. Price inflation, however has not yet set in, because what armchair economists call "deflation" which is merely the adjustment of prices downward in an effort to induce buying, is a result of economic contraction brought on by monetary inflation.

Gold is not a bubble. Its the standard by which all other currencies are measured. Always has been. Always will be.

Its price rise is not so much a reflection of increased value as of the fact that the U.S. dollar is being devalued through monetary inflation. Investors who understand this will whether the storm just fine. The rest will be cannon fodder.